Legislative audit of EB-5 rejected

A final attempt by Democrats to immediately start an additional audit of the controversial EB-5 visa program was defeated Monday.

The South Dakota Legislature’s executive board voted largely along party lines to remove from the agenda discussion of EB-5 requested by Rep. Kathy Tyler, D-Big Stone City.

Tyler has argued that current investigations and audits initiated by Gov. Dennis Daugaard don’t go far enough and aren’t sufficiently independent to get to the bottom of the visa program.

That federal program, a vehicle for wealthy foreigners to invest in American projects, is under federal criminal investigation for its role in funding the bankrupt Northern Beef Packers plant. Attorney General Marty Jackley concluded that a $550,000 state grant to the beef plant was redirected to the EB-5 program.

But a majority of lawmakers on the executive board, which runs the Legislature between sessions, said legislators should wait for current investigations to conclude.

“Anything that we at this point in time discuss about the EB-5, as long as it’s under investigation by the federal government, is very premature,” said Rep. Lance Carson, R-Mitchell.

Senate President Pro Tempore Corey Brown, R-Gettysburg, said the EB-5 program is “absolutely an issue for the Legislature” — but not yet.

Tyler disagreed sharply.

“It is our state’s responsibility to monitor this program and we didn’t do it,” she said. “To totally ignore this discussion as an (executive) board is unfathomable.”

The debate was brief but heated. Brown dismissed Tyler as “a retired schoolteacher,” saying he would prefer to learn about EB-5 from an expert. Tyler, in turn, accused Republicans of having “closed your minds to any discussion.”

State examinations of the EB-5 program include:

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An external review by a Pierre accounting firm of the Governor’s Office of Economic Development, scheduled to be finished this month;

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An audit by the Department of Legislative Audit, scheduled to finish by Jan. 24; and

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A review by accounting firm Eide Bailly of GOED’s internal control procedures, scheduled to finish on Jan. 3

Sen. Craig Tieszen, R-Rapid City, who said he was willing to discuss Tyler’s requested audit, said lawmakers will monitor the EB-5 program.

“I don’t think that now is the time to proceed. I think we ought to give deference to our criminal investigations, both our state and federal ones,” Tieszen said. “On the other hand, this is an issue for the Legislature, and we will be reviewing this at some point. It’s our responsibility to review this, either to review what’s happened and what needs to be done in the past, but perhaps more importantly, how we need to protect ourselves from future incidents.”

National hunt for research head

On Monday, the Legislature’s executive board voted to begin hiring a new executive director for the Legislature’s staff. Longtime director Jim Fry was forced out earlier this year by Republican lawmakers.

The Legislature is likely to use a national recruiting firm. A search committee was instructed to report back in several weeks with a recommendation on a recruiting firm.